The
Employment Relationship in BrazilThe
employment relationship in Brazil remains under the governance of the Law
Decree no. 5452 of May 1st, 1943,
Consolidação das Leis do Trabalho (CLT). At least two thirds
of the employees of any employer, whether of a resident corporation or other
business form, must be Brazilian nationals.

The
EmployerIt is required that an employee in Brazil be employed by an employer
registered to do business in Brazil. Direct employment by a foreign company
is not permitted. A foreign company wishing to hire Brazilian employees for
service in Brazil must complete formation of a Limitada or other company form
prior to entering into an employment relationship.

Engaging
“Consultants”Engaging services as a “consultant” as an alternative
to direct employment must be viewed with great caution. An employment occurs
whenever there is direct rendering of services to a legal entity; payment
of remuneration in a regular and consistent manner; the prolonged sequence
of the service rendering; and mainly, subordination, (ex. strictly follows
orders and procedures). In the event an employment bond is found, the “consultant”
may file a labor claim in court, claiming the sums he or she deems to be entitled,
including vacations, 13th salary, contributions for the Unemployment Guarantee
Fund, etc. At the same time labor authorities may draw up infraction notices
against the company in light of the fact that the “consultant”
has not been registered as an employee. Establishing“consultant”
relationships with individuals who are not incorporated, do not have other
clients, and who will not function with great autonomy, receiving compensation
on a “non-salary” basis should be avoided.

STOCK
OPTION PLANSWhile stock options may be
granted to employees, their
exercise requires the plan to be
registered with Banco National
and specific arrangements made
for currency to be sent abroad
for exercise.

ACQUIRED
RIGHTSContinuous and invariable payment of a remuneration
form (ex. bonus) results in the inability of the employer to discontinue its
payment.